Economic headwinds dampen outlook

Tariffs and trade winds put nation's competitive edge 'at risk', write Prasit Tangprasert, Apinya Wipatayotin and Assawin Pakkawan

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Thailand's economic outlook is worsening amid rising pressure from steep new US tariffs, with business leaders warning that the country risks losing its competitive edge unless urgent policy action is taken.

Hasadin Suwatanapongched, deputy secretary-general and honorary chairman of the Federation of Thai Industries, expressed concern over the US imposing tariffs of up to 36% on Thai goods, significantly higher than those applied to regional rivals.

"Vietnam faces a 20% tariff, Malaysia and Japan 25%, Indonesia 32%, and South Korea 25%. Even neighbouring Laos, Myanmar, and Cambodia have secured tariff reductions," he said. "Why is Thailand still stuck at 36% after negotiations? This is a clear failure."

Mr Hasadin blamed political instability for hampering the Thai negotiating team's ability to safeguard national interests. He warned that tariff disparities of up to 16 percentage points compared with Vietnam would discourage foreign investment.

"If investors must choose, they will go to Vietnam or Malaysia. Major companies may relocate from Thailand. Japanese firms here may reconsider their presence," he said.

Critical export sectors - including electronics, automotive tyres, and animal feed - are expected to suffer the most.

"We cannot compete when facing 10-15% higher tariffs with the same production costs," Mr Hasadin stressed. Waning investor confidence could also impact the stock market and the broader economy.

BALANCED TARIFFS

Assoc Prof Juthathip Jongwanich of Thammasat University's Centre for Competitiveness and Development Studies (ICDS) cautioned against eliminating all import tariffs in response to US hikes, as Vietnam has done.

Instead, she proposed maintaining duties within a 25-28% range to remain competitive with Vietnam and Malaysia, describing this as a balanced and sustainable approach.